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In announcing the quarterly financials for the March 2014 quarter, Apple may have been in a lose-lose situation. Regardless of what the figures would show, the usual offenders in the media who dislike what the company is all about will complain.

Now accompanying the news of the financial results, Apple played some more money games with its cache hoard by authorizing another $30 in share buybacks until the end of 2015, which increases the number to $90 billion. They also approved a seven-for-one stock split, which basically makes it possible for more people to afford to buy shares. That will no doubt increase stock sales, and the new stock price may soar when it becomes effective in June.

But by far the biggest news was revenue. Apple not only beat their own estimates of between $42 billion and $44 billion, a figure that made the financial community essentially yawn, but delivered actual revenues of $45.6 billion. It was a 4.6% increase over the same quarter last year, a record for a non-holiday quarter, and very much the result of selling 43.72 iPhones, millions more than the high-thirty million estimates from most of the financial community. In the year-ago quarter, Apple moved 37.4 million iPhones.

Earnings per share came in at $11.62, compared to $10.09 earnings per share last year. Gross margins totaled 39.3 percent, up from 37.5 percent last year. Wall Street should love higher profits.

Clearly there wasn’t much anticipation for the Samsung Galaxy S5 to depress sales of the iPhone. And considering the tepid reaction to the latest Samsung flagship, I don’t expect customers are lining up to buy them, which explains the discounts out of the starting gate. Mac sales did unexpectedly well too, at 4.1 million units, compared to less than 4 million last year. Apple attributes the sales results to high sales of MacBook Pros and Mac Pros, and they remain ahead of the overall PC market.

But iPad sales seemed tepid, coming in at the low end of analyst expectations at 16.3 million units. Last year some 19.5 million were sold.

While Apple’s overall financial picture appears better than many anticipated, financial analysts correctly predicted that the iPad would deliver disappointing sales. In the quarterly conference call with the financial community, CEO Tim Cook attributed the negative results to a drawdown in channel inventory, saying it was at the high end of the company’s expectations. Last year inventories were increased to handle late deliveries of the iPad mini, which was late to ship in the holiday 2012 quarter. This year, inventories were in balance. In short, Apple says the sell-through decrease was only 3 percent. Let me know when you’re ready to come up for air.

If you want to see how Apple might be able to increase iPad sales, check out this commentary from The Mac Observer’s John Martellaro, a frequent guest on The Tech Night Owl LIVE. While John makes some compelling arguments, I wonder about the demand for a larger iPad, the alleged 12.9-inch iPad Pro. The latest rumors suggest that such a beast has been delayed, after early predictions that it would arrive some time this year. But that may all be about one rumor feeding or being used as an excuse for another rumor.

Apple expects to earn between $36 billion and $38 billon this quarter, an increase over last year. If you want to see the numbers in all their glory, check Apple’s site for the particulars.

One thing is certain, and that is that Apple’s critics may be confounded by the better-than-expected numbers, but they will surely seize on the lower iPad sales, despite all the terms and conditions used to explain them.

Despite the high iPhone sales, the average sale price declined by $41, which is being attributed to record growth in emerging markets, where such models as the 2011 iPhone 4s remain quite popular.

In response to questions about flat iPad sales in the conference call, Cook said it was the fastest growing product in Apple’s history, the only product that became an instant hit for consumers, the enterprise and education at roughly the sam time. Over 210 million have been sold so far in the four years the product has been available.

Apple has a 95 percent share of tablets in the U.S. educational market, “the match has been lit,” and students do better with iPads. He felt confident that sales would continue to take off. In the enterprise, 98 percent of the Fortune 500 are using iPads, and 91% of the tablet activations were iPads. In other words, Android tablets remain a non-issue.

In the U.S. retail market, the iPad has a 46 percent share according to the latest NPD Group figures, although Cook disputes the viability of some of the competing products that dragged down the numbers. Cook also praised the arrival of Office for iPad and said it would help boost enterprise sales, where Microsoft’s productivity suite is mission critical.

He also talked of surveys showing that two-thirds of the people planning to buy tablets are considering iPads, and again cited the stellar online usage numbers, which seem far in excess of the actual market share. In the end, Cook promised that there are things in the pipeline that will make the iPad even better in the future. He summarized that, “I am very bullish on iPad.”

But whether customers will be bullish on the iPad clearly depends on what the next versions deliver. Meantime, you’ll hear the doom and gloom crowd suggesting the iPad era is over, and tens of millions of no-name Android tablets, with little or no distinctive features, are taking over.

While not having much new to say about the Apple TV, having shed its hobby status, Cook did report that some 20 million of them had been sold so far.

One Response to “Apple’s Earnings: What’s Good is Bad is — Whatever”

It’s hard to evaluate the drop in iPad sales if we don’t know the sales figures for tablet devices generally. Is the iPad losing a little of its luster in the marketplace, or is the demand for all tablets softening?